Conservative leader Kemi Badenoch has made new property tax pledges should her party win the next General Election.
Last year she promised to scrap Stamp Duty entirely on primary residences, and today she has announced a massive overhaul of Inheritance Tax
- Inheritance Tax overhaul: Conservative leader Kemi Badenoch says a future Conservative government would ensure no Inheritance Tax is paid on the family home, while couples could pass up to £1 million to their families tax-free.
- Mansion Tax repeal: The Conservatives would repeal Labour’s proposed High Value Council Tax Surcharge (“mansion tax”), due to be introduced in 2028.
- Stamp Duty and housebuilding: Badenoch reiterated her previous pledge to scrap Stamp Duty on primary residences and said a future Conservative government would cut building regulations she believes are restricting developers and pushing up the cost of new homes.
- Other tax and spending pledges: The Conservatives would cut National Insurance for 21–24-year-olds, costing an estimated £2.3bn, while claiming £35bn could be saved from government spending to reduce the deficit.
- Contrast with Labour’s inheritance changes: From April 2027, Labour plans to bring unused private pension pots into Inheritance Tax calculations. Currently, individuals generally have a £325,000 nil-rate band, plus up to £175,000 residence nil-rate band, meaning qualifying couples can potentially pass on up to £1m tax-free. In 2023–24, Inheritance Tax was paid on 4.72% of estates, raising around £7bn.
She told her party conference today: “The next Conservative government will legislate so that nobody pays Inheritance Tax on their family home.”
In addition, she says couples will be able to leave up to £1m to their families without paying inheritance tax.
She also pledges that a future Tory government would repeal the upcoming mansion tax – the so-called High Value Council Tax Surcharge to be introduced by the current government in 2028.
In another reference to the housing market, the Tory leader pledged to cut a range of building regulations which she claimed held back developers from building more homes at lower prices.
In another taxation pledge, Badenoch told Tory conference delegates that her government – if elected – would cut National Insurance for those aged 21 to 24.
The policy, if enacted, would cost £2.3 billion and would be funded via a government spending ‘savings plan’ to be published later today. Badenoch insists the plan is “fiscally credible”.
In other parts of her speech, Badenoch claimed to have found savings in public spending which would allow the governments financial deficit to be paid down by £35 billion.
She also spoke of a ‘get to work’ programme which would reduce overall benefit entitlements for some welfare recipients.
Current Inheritance Tax rules:
Everyone can pass on £325,000 tax-free after they die using the nil-rate band of inheritance tax.
Most people are also entitled to an additional £175,000 tax-free allowance if they pass on the family home to their children or grandchildren – known as the residence nil-rate band.
Married couples and civil partners can combine these tax-free allowances, meaning many couples can pass on an estate worth up to £1m to their children or grandchildren before inheritance tax is due (£325,000 + £175,000 + £325,000 + £175,000).
Residence nil-rate band starts to reduce, once the value of your estate exceeds £2 million.
No inheritance tax is due when assets pass between married couples or civil partners.
Labour’s change from April 2027:
The current Labour government has already announced that from next April so-called leftover private pension pots will no longer sit outside inheritance tax rules.
At the moment, if you have a discretionary private pension (the most common type), and you die before using it all, the remaining money can usually be passed to your beneficiaries tax-free.
From 2027, its value will be added to your estate when calculating inheritance tax.
When pension pots worth tens or even hundreds of thousands are included, more families will find themselves facing inheritance tax bills.
In 2023-24 inheritance tax was paid on 4.72% of estates and raised around £7 billion for the government.
